Obamacare: 1 Million Incorrect Health Subsidies

June 4, 2014

While the vast majority of Americans who enrolled in coverage through Obamacare are receiving subsidies, 1 million of those subsidies were incorrect, writes Peter Suderman, senior editor at Reason Magazine.

Obamacare grants health insurance enrollees subsidies based on their annual income, which those signing up for insurance must report. However, around 1 million people have reported incomes that differ from what the Internal Revenue Service (IRS) has in its records. It is unclear how many of the subsidies are too high or too low.

Why can't these problems be dealt with through the auditing process? While that would normally be the way that such discrepancies would be handled, only a small fraction of the people contacted by the IRS has responded to the agency's requests for proof of income.

Moreover, even with that documentation, the computer system lacks the ability to match the proof with the person's application, as that capability has yet to be built. While that verification system was supposed to be completed last October, work on the program has been pushed aside as officials focused on fixing the front-end of the system. Federal officials will not say when they expect the program to be complete. Insurers have been told to use the manual workaround system until September, at the earliest.

The reported incomes are not the only problem with the law -- another 1 million applications have raised questions about the enrollee's citizenship. According to the Washington Post, of the 5.5 million Americans who signed up through the federal insurance exchange, 3 million have applications with at least one inconsistency.